Debates of Dec. 4th, 1997

Canada Pension Plan Investment Board Act

[The Acting Speaker (Mr. McClelland)]

The hon. member for Winnipeg North Centre in response.

We have five minutes remaining and two other members have interventions.

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, it is very clear there is not unanimous support or even two-thirds support for the kinds of changes the Liberal government is introducing by way of Bill C-2. There was a huge outcry on the part of Canadians when they learned about this piece of legislation.

The problem is the government is busy forcing it through so quickly that there has not been ample time and ample opportunity to ensure that Canadians are well informed enough to raise their concerns.

We as members of Parliament have had the opportunity to send out questionnaires and to seek opinions. We know that Canadians are deeply concerned about these changes and would like us to do whatever possible to slow down the process and to have a thorough review of the national retirement—

[The Acting Speaker (Mr. McClelland)]

The hon. member for Waterloo—Wellington.

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

Mr. Speaker, I listened with considerable interest to the hon. member opposite when she spoke of Stanley Knowles. I want her to know that I too knew Stanley Knowles. In fact to this day I have a picture of him in my office with a mutual friend. I very much admire who he was and what he represented.

I also want to say that while I do not know how Mr. Knowles would have voted on this issue, it is fair to say that he would have respected the government's position in keeping the universality of the CPP in place for all Canadians. I knew him well enough that I think I can say that. While he might not have voted with us, he would have respected the government for what it has done.

I remind the hon. member that we have had considerable debate on this issue. We debated the bill for nine and a half hours at second reading. Consultations have been held across the country.

When the member says we are ramming the legislation through, does she dismiss the hours and hours of consultation which have taken place?

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, we had seven hours of debate at second reading, which was hardly time enough for but a handful of members in this place to participate.

We had the government refusing to allow for full representation at the committee hearings. Many groups were excluded. There was a built in bias for friends of the Liberal government, the BCNI, the Fraser Institute, all of those organizations, while excluding the Council of Canadians, the Canadian Union of Public Employees and other groups. The government refused to address any of our amendments—

[The Acting Speaker (Mr. McClelland)]

Questions and comments. The hon. member for Kitchener Centre.

[Karen Redman, Liberal, Kitchener Centre, ON]

Mr. Speaker, I sit on the Standing Committee on Finance so I am interested to hear the concern of the hon. member opposite for the consultation process.

I am going on memory but I believe that we held at least 22 meetings to listen to a vast variety of both special interest groups as well as members of private pension plans, and I think of a teachers pension plan. We had them comment on the legislation and whether they felt it was a balanced and sustainable direction to head in and the fact that we had legislation in place to give the kind of arm's length integrity that we needed in this process.

[The Acting Speaker (Mr. McClelland)]

In response, the hon. member for Winnipeg North Centre.

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, I appreciate the fact that many organizations were able to appear before the committee, but many were not. In fact the Canadian Union of Public Employees representing 500,000 workers was not able to appear. It was turned down. The Council of Canadians, which had a petition with 500,000 signatures, was not able to appear. Many other concerned Canadians were not able to be before this committee because it was located here and there was no opportunity to go to the expense and the time to get here.

Let me just conclude by saying that not only were groups refused in terms of participation but in fact those that were able to be here were not listened to. The Council—

[The Acting Speaker (Mr. McClelland)]

Resuming debate, the hon. member for Kitchener—Waterloo.

[Andrew Telegdi, Liberal, Kitchener—Waterloo, ON]

Mr. Speaker, let me say first of all, that all the members from my area, three of us, got to speak on this particular bill this afternoon.

Let me also mention Stanley Knowles. I have nothing but respect for Stanley Knowles. A couple of years ago I hosted an event on the Hill—

[The Acting Speaker (Mr. McClelland)]

Excuse me, if the hon. member for Kitchener—Waterloo and other hon. members would forgive me, I was not paying attention. When debate resumed it should have gone to the hon. member for Dartmouth. Please forgive me. We will get back to the member for Kitchener—Waterloo.

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, the hour is late on this bill although it has been an indecently short debate that has occurred on this important legislation.

It is important to read into the record some excerpts from a report by Eric Norman, the president of the Council of Canadians with Disabilities, and Harry Beatty, the director of policy and research for ARCH: A Legal Resource Centre for Persons with Disabilities. At the same time I would like to comment on some of the more chilling aspects of this report.

The disability component of the Canada pension plan has been targeted for billions of dollars in cutbacks in the recent legislative amendments announced by the finance minister and by the Minister of Human Resources Development. The impact of these changes on Canadians with disabilities has been consistently understated or totally ignored by both politicians and the media. To a great many disadvantaged and vulnerable individuals however the new rules will be devastating.

The sixteenth CPP actuarial report prepared by federal chief actuary Bernard Dussault projects a total cumulative reduction in CPP spending on disability pensions by the year 2005 of over $1 billion—

I would like to repeat that, $1 billion.

—while the cutback in retirement pensions and other benefits for the same period is less than $.5 billion. Since the disability program is only about one-fifth of the total CPP, this means that it is being cut much more than any other component of the CPP.

I find it astounding that what we are doing is cutting the benefits of the most vulnerable members of our society.

The depth of this reduction in CPP disability has been carefully hidden from the public by the federal government and the eight provincial governments which support the cutbacks.

Those already receiving CPP disability pensions will not have them taken away or reduced. The persons who will be adversely affected by the “reforms” are now working, often blissfully unaware of the career-ending disability which will affect them in future. The government has adopted the same strategy for persons with disabilities as for seniors: “grandfather” those now eligible, to blunt criticism, and apply the cuts to those whose needs will arise in the future.

The finance minister has recently indicated a willingness to rethink the seniors benefit—he should look again at the disability proposals as well. It is unjust to do otherwise.

But that is an unjust government we are facing right now across the floor from us.

The new CPP plan, scheduled to come into effect on January 1, 1998, has the support not only of the federal government but of eight provincial governments. Only B.C. and Saskatchewan are opposed. Under the amending formula, which requires CPP amendments to be supported by two-thirds of the provinces representing two-thirds of Canada's population, there is sufficient provincial support to have the changes apply across Canada—. Quebec participates fully under the amending formula, although it has its own Quebec pension plan. The PQ government is co-operating with the federal government in making the disability program cuts.

As of 1998, the new rules will require CPP disability pension applicants to have earned more than a specified amount in four of the last six years prior to being determined to be disabled. Current rules require contributions in either two of the last three years or five of the last 10 years. Who will be excluded from eligibility? Young people in the first three years of employment will not qualify.

For example, if a young person who is 21 and has an accident in the first year of his job and he is not covered by workers compensation or he has no private pension plan, which very few people do, that young person will in fact go straight on welfare for the rest of his life.

In another example perhaps a young person with a disability such as Down's syndrome lives with his family and has modest means with no other pension plan. That person may have no labour force attachment—that very strange phrase we use today meaning a job. And the chances as we know are very limited that people with disabilities have jobs unless there is enormous support available for them to get those jobs to begin with. We also know that those supports are disappearing at a great rate. The future for that person without labour force attachment will be either institutionalization or welfare.

It is a cruel irony that this government spends so much time talking about youth when in fact what it is doing is setting them up for a very bitter harvest in the future. That is what we are doing now for our youth.

Others who will be affected very negatively by these changes will be those with recent attachments to the workforce who have for reasons beyond their control such as unemployment or caregiving responsibilities somehow been unable to be eligible.

Of particular concern to us are those who have tried to keep working despite the onset of a disability—multiple sclerosis, or psychiatric disability, cancer, amongst many others. They will be “rewarded” for their determined efforts in many cases by complete disentitlement to a CPP disability pension, which in turn will greatly reduce their eventual retirement pensions. To top it all off—pensions will now start to rise above the minimum contribution level, so someone with low earnings may have to pay CPP contributions to the government in a year, only to be told later that the contributions do not help in qualifying for a disability pension.

Those currently receiving CPP disability will not be affected. Those who apply before the end of 1997 will also have their cases determined under the present rules, so if you believe you may qualify, you should apply as soon as possible. But thousands who become disabled in the future will be disentitled, especially as they reach their fifties and sixties, where the likelihood of disability is much greater.

I guess we should say baby boomers wherever we are in this crowd, beware because it could happen to us.

The cutbacks under the new CPP disability program do not end there. Those who do qualify for CPP pensions will have their eventual retirement pensions lowered by the new rules. Widows and widowers who are themselves disabled will have their combined survivor disability benefits reduced.

Worse still, the federal government states it will continue its administrative changes to the CPP disability program which it describes as “improvements”. What Human Resources Development Canada has really achieved through its administrative “improvements” has been a restricted approach to determining who is disabled, which has disentitled thousands of Canadians unfairly. Older workers in particular, in their fifties and sixties, are being found “capable of working” despite significant health problems leading to physical and mental limitations. The “jobs” they are supposedly able to do may exist in a bureaucrat's CPP manual but they do not exist in Canadian communities in 1997. CPP continues as well to penalize those who attempt training, education, rehabilitation programs or a part time or time limited return to work by finding them “employable” as well, in spite of a supposed policy which says this should not happen.

You do not get rich on CPP disability. Monthly disability pensions in 1997 range from a minimum of $330 to a maximum of $883. Payments are taxable so they are reduced in value for those with higher incomes. But for many who have a limited attachment to the workforce—

There is that great phrase again.

—because of unemployment, caregiving, home making or the onset of disability, the CPP pension benefit is desperately needed. It may be the only benefit a disabled person qualifies for, for example, if his or her spouse is working or if there is a modest income from savings. It is unfair to take the CPP disability pension away from those who need it the most.

Completely unnoticed in the debate is the cost impact of reductions in the CPP disability program on other disability income programs, including provincial social assistance, workers compensation and long term disability insurance. Those other programs top up CPP where a person qualifies for both. So if CPP is cut—

[The Acting Speaker (Mr. McClelland)]

I am sorry, the hon. member's time has expired. It is time now for questions and comments.

[Tony Valeri, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, being mindful of the earlier ruling that you made of 45 seconds, I will be very brief.

I just want to make the comment, after hearing this speech, that I guess the NDP is the only party in this House that really feels there is no problem with the Canada pension plan. It ignores the fact that changes were required to the Canada pension plan. The NDP thinks that just sitting back and hoping things will get better will deal with the challenges the plan is faced with.

When the NDP members continue to talk about the disability side of the benefit, they need to understand that as a reflection of what Canadians have said, 75% of the changes to CPP are on the financing side and 25% are on the benefit side. We went easy on the benefits and that is a reflection of what Canadians said throughout the consultation period.

We had a year and a half of consultations. Members from the CFL, United Steelworkers, CUPE, CAW, Canadian Labour Congress, all made interventions with respect to the consultations. Unions had representation.

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, $1 billion by the year 2005 is not going easy on benefits. Although the CPP disability program has its weaknesses, nevertheless it has been an important cornerstone in Canada's safety net for those who have become disabled. The CPP disability cuts will save a few pennies from everyone's paycheques but thousands who become disabled will suffer the consequences.

Shame on this government for the legacy that we are leaving our young people now and in the future.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I want to congratulate the member on her sincerity in terms of the plight of the disabled in Canada. There are many people in Canada who are in circumstances that do not allow them to participate in the Canada pension plan. I know that the member is very sensitive to the plight of the stay at home mom who spends a great part of the income earning years managing the family home and caring for preschool children and who does not get any benefits. I am sure that the member would agree that consideration should be given to dealing with the issue of unpaid work.

I would like to ask the member a question. She is probably aware that the history of the disability benefit in the Canada pension plan is such that the number of claimants has been substantially larger than was ever anticipated and that the duration of disability benefits has been over a much longer protracted period.

I wonder if the member would concede that notwithstanding the need for disability benefits, the important issue is the pension benefits. The provinces and the federal government agreed in consultations that we should not do anything that would impinge on the security of the pension. Would she agree that it is important to secure the pension benefits first and deal with the disabilities with the best efforts possible?

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, I have to go back to the astounding figure of $1 billion being taken out of disability payments by the year 2005. I have to go back to the fact that we are looking at young people who in the future will grow older and who will possibly become disabled. We have to make sure there is enough money available to allow them a decent quality of life in the future. That is the bottom line. We find the money wherever we can, but find it. That is all there is to it.

[The Acting Speaker (Mr. McClelland)]

Resuming debate with the member for Kitchener—Waterloo, who will not be interrupted.

[Andrew Telegdi, Liberal, Kitchener—Waterloo, ON]

Mr. Speaker, let me begin by paying tribute to Stanley Knowles and letting the members of the New Democratic Party know that a couple of years ago I hosted a reception on Parliament Hill to help launch the Stanley Knowles chair at St. Paul's College at the University of Waterloo. We are involved in raising money for the project and I really hope that the New Democratic Party will help us make sure that wonderful chair continues.

Besides paying tribute to Stanley Knowles, let me pay tribute to Paul Martin, Sr. who was the minister who brought in the Canada pension plan along with Lester B. Pearson. I think it is important and we all owe a debt to those Canadians for their forward thinking in making the issue a reality in Canada which has greatly improved the lives of seniors.

People have been talking about slowing down the process. The fact is if Canada pension is to be sustainable, we have to deal with the changes and with the issue.

I have my householder here from December 1994, in which I consulted the constituents of my riding about changes to the Canada pension plan. It had a much better response than any other survey I have done. We have been dealing with these changes for a long time.

Almost 50% of my constituents are under the age of 30. It is imperative to their future that this Liberal government do something now to fix the Canada pension plan and to ensure that it is fair, sustainable and viable for the future. The government has done just that. The changes contained in this bill represent one more element in the larger policy agenda that the government has pursued since its first day in office, an agenda aimed at ensuring the well-being now and in future of our young people.

That policy agenda includes encouraging economic growth and job creation by getting our fiscal house in order and ensuring affordable, sustainable and fair social programs capable of serving Canadians both today and in the future. As part of this, we have undertaken a number of initiatives to promote the well-being of all Canadians.

For instance, we introduced EI reform. In addition to being fairer and more effective it has allowed many part time workers to be eligible for benefits for the first time. We also introduced the youth employment strategy to give young Canadians the training and work experience they need to make the transition from school to work a little easier. We recently announced our intention to introduce a national child benefit to fight child poverty.

The bill before us today represents one more element in this strategy. It is a balanced package of measures that will establish a new investment strategy and adjust contribution rates and benefits so the Canada pension plan can continue to serve Canadians well in the future as it does today.

There are those who complain because rates will increase slightly and benefits will decrease slightly. Yes, this is true. However, it is also true that the chief actuary has projected that if the status quo were maintained, premiums would have to go to over 14% in order to preserve the Canada pension plan. This situation would threaten future prospects of young Canadians.

It is because this Liberal government has looked ahead to the future and is taking action now that premiums will increase incrementally over the next five years to a ceiling of 9.9%. This increase will be shared by employers and employees equally. This is substantially lower than the 14% increase we would have if we sat on our duffs and did nothing, as the previous Conservative government did.

These modest increases teamed with small adjustments to benefits and improved management of the plan's assets will sustain the plan for future generations of Canadians. The proposed changes in this legislation reflect the ideas expressed during Canada pension plan public consultations.

I consulted with my constituents on the future of the Canada pension plan in the winter of 1994-95. Sixty-three per cent of the respondents said they supported an increased rate of contribution. Almost 70% were opposed to privatization, which is what the Reform Party is proposing.

We have listened to our constituents. The proposed changes also reflect negotiations with our provincial and territorial partners and the recent work of the House of Commons committee that studied the bill.

Ensuring an affordable, sustainable and credible plan also means looking at the benefit side of the Canada pension plan. However, during consultations Canadians told us to go easy on changes to benefits. Eighty per cent of my constituents were against the elimination of survivor and death benefits. Seventy-five per cent were opposed to increasing the benefit age.

We have listened to them. The proposed changes are moderate and they will be shared among all groups and be fair across generations so that no one is unduly burdened. Moreover, current retirees who are not able to adjust their retirement plans will not have their current benefits affected by the changes.

Those changes that will affect future retirees are modest. For instance, there is a new formula for adjusting previous earnings and calculating retirement pensions. This change will only affect benefits payable to future retirees. For example, retirement pensions will be based on the year's maximum pensionable earnings of the last five years instead of the last three years.

The changes resulting from Bill C-2 in terms of benefits will be small. For example, the maximum monthly pension based on this year's figures would be $724 instead of the current $736. The eligibility criteria for disability pensions will be updated. Future applicants will have to have contributed to the plan in four of the last six years. This is a reasonable requirement given that Canada pension plan disability is not designed to be a lifetime income replacement. Currently, recipients must have contributed in two of the last three years or five of the last ten years.

There are also changes to the retirement benefit formula for disabled beneficiaries. Like retirement and survivor benefits, Canada pension plan disability pensions will be fully indexed from the time they are put in play.

During the public consultations Canadians, including persons with disabilities, told us that people should have to work longer to qualify for disability benefits. So this bill requires a stronger workforce attachment. It also brings disability pensioner benefits in line with other Canada pension plan benefits. Effective administration measures have already been taken to strengthen the administration of the disability program. As a result the disability caseload has been substantially reduced. There are new guidelines for determining disability. We are doing more follow-up work to ensure continuing eligibility and we are using new technology to manage cases. We have launched a pilot project to enhance rehabilitation efforts.

Another change affecting the future benefits payable involves combined benefits. Some beneficiaries can currently stack disability and survivor benefits, or survival and retirement benefits.

Under the current rules combining disability plus survivor benefits, beneficiaries can receive up to $185 more per month than other disability beneficiaries. Under this bill the combined total would not exceed the maximum disability pension.

As well, the rules for calculating combined survivor retirement benefits will change. These changes would bring the rules closer to those which existed before 1987 when the rules governing stacking provisions were relaxed. Like other benefit changes, these reforms do not affect people already receiving benefits under these provisions.

This bill would also adjust the death benefit. Currently the benefit equals six months of the contributor's retirement benefit or 10% of the year's maximum pensionable earnings, which is $3,580 in 1997. The formula would reduce the ceiling to $2,500 and freeze it at that level.

About one half of Canadian workers already have similar coverage through private sector insurance. It is important to remember that the death benefit was never intended to cover 100% of the cost. It was designed to be combined with other financial planning efforts to meet individual needs.

The changes in this bill will ensure fairness and sustainability of the Canada pension plan. That is what Canadians have asked us to do, fix the CPP where it needs to fixed so that it will always be there, Canada's legacy to our future generations. The plan will ensure our seniors are always taken care of. That is the KW way, that is the Liberal way and that is the Canadian way.

Administration of the plan will be improved, funds will be invested and managed professionally and the plan will be able to serve our children and grandchildren when they need it. For this reason I urge all members to support this legislation before us today.

I also pay tribute to the Minister of Finance who is continuing the legacy of his father by bringing the financial affairs of this country in order so we are able to have social programs like the Canada pension plan.

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, I am wondering if the member for Kitchener—Waterloo would be able to give me some comfort at this point with some of my concerns about a young person. A young person who has just entered the workforce gets injured on the job. They have not been working for three years, maybe for three months, and does not have a wealthy family. Their family is not labour force attached and has no facilities whatsoever. What is the future of that person at that point in their ability to make their way through the world? Does he have some real comfort that he can give me now given the new changes in the plan that is being instituted?

[Andrew Telegdi, Liberal, Kitchener—Waterloo, ON]

Mr. Speaker, I thank my hon. colleague for her question.

First, injuries on the job are covered by compensation programs at the provincial level. The disability benefit was not meant to be there for everybody. It was meant to be there for people who have had a reasonable attachment to the workforce.

In the case the member refers to it would have to be a case of going with the compensation program at the provincial level.

[The Acting Speaker (Mr. McClelland)]

It being 5.15 p.m., pursuant to order made on Monday, December 1, 1997, it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the third reading stage of the bill now before the House.

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Mr. McClelland)]

Is it the pleasure of the House to adopt the motion?